You're forgetting one of the biggest energy booms in East Africa over the last couple years: solar power. From solar lamps of 1-2.5W, all the way to institutional-scale solar systems, solar has become big business in East Africa - just walk down Market Street in Kampala, or any rural electronics shop, and they are overflowing with solar panels stacked outside their doors. The company I work for, ToughStuff Solar (http://www.toughstuffonline.com), has already reached over 1,000,000 customers in sub-saharan Africa over the last two years, who otherwise would suffer from the fumes of kerosene lamps which are the only source of light for most people.

Why is the solar business booming? Because amortized over 20 years, solar costs up to 30% less per kWh than grid power. In Uganda, for example, 80% of the population has no hope of getting grid electricity in the next 20 years. Extending the grid to a building just 7km from the nearest power lines costs up to $120,000. At the same time, demand for electricity is growing at 10%. In rural areas this is driven in large part by the widespread adoption of mobile phones, which for village folks can only be charged by spending a day's income hiring a boda boda taxi to the nearest phone charging shop and paying the guy there to charge the phone. The best way to meet this demand is decentralized solar power, which doesn't require costly investment in grid extension, and benefits from the region's sun-soaked equatorial climate.

Just three weeks ago my car broke down in central Uganda, about 35km from the nearest town. While we were waiting for another car to pick us up, I visited the local farmer by the side of the road. He barely spoke a word of English, but his son proudly showed us the 180W solar system, worth nearly USD 1,000, installed on their roof. With it they not only could power electric light and a TV in their house, they were making money charging their neighbors' mobile phones!

While politicians in the West write off renewables as too expensive, poor Africans are managing to afford solar.

So if you're looking to invest in the East African energy bonanza, solar is the first place to look.

This article could go on and on as there are so many more stories to tell about the natural richness in Africa. As a simple example, the Inga river in the DRC, if dammed, has an unbelievable potential with talk that it could supply most of Sub-Saharan Africa with clean electricity. Unfortunately, the Economist should perhaps have discussed the timing and economic development of these projects:

The first projects to take off will always be in the mining sector as they bring in foreign hard currency. Will African governments be able to 'piggy back' off the mining projects with, say, extending a rail line that feeds a mine to connect up to a certain part of the country. Already we see attempts to do this: in Mozambique, there is a program to develop the east west rail line from Nacala via Nampula to connect into the growing farming sector linking the farms to the deep harbour in Nacala. On the back of this line, there is a hope to extend the line right across an into Malawi and link it to both the main cities of Lilongwe and Blantyre, thus connecting land locked Malawi to the Nacala harbour.

The challenge is for governments to face up to the concept of "thinking big" and push for the mega projects that will transform their domestic economies. For example, the dam and geo-thermal projects (discussed in this article) will yield electricity to local consumers, but revenue will be in local currency and most likely need to be converted to hard currency to pay the foreign contractors (whether Chinese or European, etc).

There is a considerable amount of risk when receiving revenue in the local currency and then converting it to foreign currency and face ever changing exchange rates. Also the ability for the local market to pay (on time and in full) does have some challenges of its own.

Will African leaders sit back and enjoy the foreign currency of the mining type projects? or will they be able to channel that money and invest in domestic mega projects?

The answer to this question is directly linked to the challenge of democracy in Africa (the previous Economist article).

It is time for Africa to rise, uplift their people, vote out incompetent and/or visionless leaders and throw off the shackles of poverty.

The writer blames lawlessness for lack of investment in Somali oil. This is a clear demonstration of how the West is losing its nerve and its sense of adventure and perhaps points to its strategic decline and its replacement as an empire by the Asian East.

A century ago when oil was discovered in Persia and a little later in what is now Saudi Arabia, both of these places were completely lawless, inhospitable, inaccessible bandit badlands where men killed each other at the drop of a turban for a drink of water. In fact they were not even countries at at all in the modern sense of the Nation State. Arguably both were in far worse state than Somalia is today.

Yet it did not deter the likes of BP and Shell and later American oil behemoths to set up camp and pump the stuff out of the scorching earth. BP and shell even created completely new countries out of these places with the help of the British authorities of course. Easy to forget there was nothing called Saudi Arabia before the British created one. The area was Nejd, Hijaz, Asir, Rubual Khali etc.

Yet today not one of the major Western oil companies will dare set foot in any place unless it looks as quiet and peaceful as Surrey on a bank holiday weekend.

The only Western entrepreneurs willing to take any risks seems to be the good old Aussies. As we speak two tiny Australian outfits have just struck oil in Somaliland and Puntland. Good on them.

Aly. If their is one thing I am happy about is the growth of the BRIC nations. Africa now has a choice between the World bank and the upcoming BRICs bank. Chinese influence has particularly been helpful for Africans. I really like the idea of barter trade in for example DRC, where the Chinese have been allowed to mine resources worth $6b in exchange for infrastructure (roads, schools, universities etcetera). Although this deal may have some loopholes, at least, this time the local populace will get something, and the west who have forever colluded with corrupt African despots to siphon all that money to Europe. I read -'The third British Empire', by Dan Hind - Aljazeera, and sobbed thinking about Tullow Oil in Turkana. Lastly, I strongly believe, these new found resources might lead to reorganization of Eastern Africa. Deep seated,prejudices between communities might re-emerge.

All this talk of Balkanization of east Africa most likely is coming from former residents of the failed state who would love to see anarchy in the neighbouring countries so that they are in good company.

There is not a single chance that Ethiopia and Kenya would let go of the Ogaden and NFD. For one, East Africans have seen the effects of prolonged conflicts elsewhere and there are not many who are keen on importing full scale ethnic conflict that may go on for decades. Any attempts to break away is unlikely to attract widespread support, outside a few ideologues. That also applies to the MRC at the coast. Secondly, all these pseudo-independent movements lack the military means (and will or desire) to engage well armed govt forces, and that will remain so for the foreseeable future. So, you can forget about it

I am very happy to see these developments. For decades these countries were totally dependent on aid. Money that showered from above and did not filter down to the masses. This let to a dichotomy, rich politicians and bureaucrats in the capital and grinding poverty in the surrounds. The dependent nation syndrome.

A couple of pieces of very good, even essential advice, which I hope persons with influence in these countries will take note.

1. The legislation inherited from the colonial era regarding taxation of resource extraction, based on royalties, IS chaotic. What is more the individual nations lose out in the negotiations. They are the losers in a very inefficient form of rent extraction.

What I strongly recommend is that the royalty system and arbitrary taxes are replaced by a tax on economic rents. The design of this tax is in economic parlance called the "Brown tax". Economists qualified in this area will be more than willing to explain, and assist, and if the advice is taken, to get an efficient tax up and running. The mining companies will hate it as they cannot hide revenue, nor complain or threaten to reduce output. From the economists point of view the tax is a win-win situation.

2. Second piece of advice. Try to avoid the "Dutch Disease". This is a description of a whole range of economic and social problems caused by the increase in revenue from mineral sales. The major issue is an excessively high exchange rate, which kills exports, and thereby all other industry and agriculture. Yet the money is like a drug. Governments love it. But they only spend it on themselves. Big salaries for the government bosses. A flashy capital city. Yet again, as with aid income, grinding poverty in the countryside.

Solution. Roads. Roads. Roads. Plus other infrastructure expenditure. Schools. Hospitals. Sewerage. Water. Most of the money must NOT go on "welfare" or salaries, but on hard stuff, stuff you can touch and feel. It is too easy to spend money on salaries with the intention of "doing good", (welfare aid agencies are notorious for advising this), but you must not do that. Hard infrastructure expenditure almost totally. It increases employment and expands the non government dependent economy. Forget that and government bosses and their families in the end are likely to get their throats cut. "Oh, it won't happen to me!" Tell that to Gaddafi and his family, and his legion of hangers on.

In the context of this article , Madagascar has huge potential with Oil/Gas/Mining projects starting to get underway.

as pointed out by many previous posters , the revenues received from these projects needs to be used for infrastructure for the country , not villas in southern France and shopping trips to Hong Kong for treasonous thieves.

The Horn of Africa all the way down to Mozambique is sitting atop a Lake of Hydrocarbons. Its popped the Place from deep under cover at the Frontier over the Global Radar. It represents a miraculous Opportunity. Governments and Corporates need to ensure Trickledown. Thats a Must. Interestingly, one might speculate that the Insertion of 100 JSOC Soldiers [and the incredibly subtle and viral StopKony Campaign which lent legitimacy to that Insertion] marks a Geopolitical Tipping Point as well.
I suspect Europe and the US have had an Epiphany and are now altogether more serious about staunching the Chinese Advance. Sudan looks like the Line in the Sand.
Interesting times.
Faithfully
Aly-Khan Satchuhttp://www.rich.co.ke

Kenya was sent into a "delirium"? Not exactly. The prime minister and a few other ministers staged a tame, televised delirium and nobody else I know in this country even mentioned the oil strike, let alone danced about it.
Why would they? Kenyans know that the oil revenues will mostly disappear into the pockets of politicians. The state's share of it anyway. It is possible that the extracting companies, whoever they are, will be more generous to the local communities, giving them roads, wells, power, etc.
Whatever the case, flow production is still a long way off, and most of Kenya's 38 million people can't wait for oil money to end their problems. The future of the country depends on what will be done within the next few years to keep civil peace amid an election campaign and fix the dysfunctions in agriculture, forestry, distribution, water supply and food refinement. The basics, in other words.
The oil strike is a story for a future generation of Kenyans, the existence of which is not assured.

First, the installed capacity in Ethiopia is today nearly 2,000MW and not 1,000MW as suggested. Furthermore, while it is true that the Grand Renaissance Dam will have an installed capacity of 5,250MW (or 6,000MW as someone stated in the comments), the load factor of the plant will not reach 40%, this is, the pant will never generate electricity above 2,100MW as the reservoir of water will never allow for it. It looks great on the paper but once you go deep in the details, not so good.

Nonetheless, i really believe hydro potential in Ethiopia will be key to power the country and the region at prices way more competitive than other forms of energy (e.g. solar, wind, thermal, etc.). This will have the potential to increase political ties between countries and increase integration on a region that finally is having a chance to unleash its potential.

Kenyans in Kenya can buy shares online in the US market. Below are my 10 favourite stocks.http://screencast.com/t/ebpNzbfaDKbo
Very large, growing like my 2-yr-old son, 60% oil, nice inflation hedge. What do you guys think?

Oil wealth can be a blessing, but more often it is a burden. East Africa is riven by the small arms trade, ethnic conflict, political violence on the level of genocide, not to mention the starvation and poverty this implies. Terrorism is another trend that has become entrenched in the region, with militant groups taking advantage of the abundant youth population.

Now oil has given the great powers interest in a region they long neglected. This will mean substantial foreign investment, with increased capital, technology, and expertise providing the region economic benefits.

How those benefits are used and the rivalry between the great powers will determine whether this is a blessing or burden. My honest opinion is the latter.

Foreign companies will dominate any concessions, so much of the energy rents will immediately leave the country in the hands of the multinationals. The royalties and taxes they pay will likely go disproportionately to the federal government, rather than to the local authority or population. Corruption will be a major problem.

The struggle for the oil money will not be fought solely behind closed doors. Governments that benefit from the oil business will likely be sought out as potential weapons buyers, either from Western countries, China, or some other power, depending on where the oil majors operating in the country originate from.

With these new resources, global statecraft between the great powers will only intensify, meaning more African proxy wars, corruption, and suffering.

Call me a pessimist, because there is an alternative scenario, where African governments balance the interests of the great powers, institute transparency and accountability in regards to oil rents, and pursue social development. This is the scenario I hope for.

Unfortunately, history has showed us that the great powers, the oil companies, and the local governments are likely to pursue short sighted self interested policies that come back to bite them in the ass. Let us hope I am wrong.

Oil is like a evil seed that only serves to distract the attention of it's citizens, businesses and government, whilst growing ideas of grandeur, country development and personal ease.

This does not happen. Distraction from the realities that East African 'developing' nations are in, will do nothing but destroy the need for people to move forward and exist within the realities of their environment.

There are no quick fixes life - hard work is what is needed. Not gluttonous oil companies.